Sources of Japanese competitiveness and growth

Abstract

This paper examines the properties of a dynamic equilibrium model focused on sectoral specialization and dynamic competitiveness in international trade. Factors of competitiveness and growth were broken down into three parameters on the export side, two parameters on the import side, and two parameters on the productivity side. Furthermore, the relation between the growth rate of productivity and the wages index is examined. In the first period, 1960–1972, the rapid change in the structure of Japanese production and the composition of Japanese exports paralleled the rapid structural change in the international market and the rapid change in the prices of Japanese exports, stimulating Japanese exports to the international market. The engine of economic growth here is a significant technological change along with improvement of labor and capital productivity. In the second period, 1973–1996, factors such as improving the quality of production, cumulative experience, and the flexibility of price elasticity were crucial factors in increasing Japanese exports. Despite the decline in growth rate of technological change, the engine continued to grow and was supported by increasing the value of the economies of scale.